The race to offer consumers the fastest and cheapest PCs began Sunday and includes instant discounts at the checkout counter, mail-in rebates in excess of $100 and enhanced bundles. For example, Dell Computer on Tuesday is introducing its new Dimension 2350 desktop with a 15-inch flat panel display for $699 after a $100 rebate.
"Last year was pretty aggressive. I think it's going to be equally aggressive this year," said Toni Duboise, desktop analyst with ARS. "I think it'll ramp up a little bit as the holidays get closer and manufacturers try to motivate the PC buyers that are out there."
While the deals may be good for buyers, some analysts think that even with aggressive prices, PC makers are still going to have a tough year due to consumer concerns about the sagging economy.
Duboise and others have noted that manufacturers may not have much of a hook with which to drag reluctant buyers into stores. Last year, Microsoft's release of its Windows XP operating system, along with low computer prices, spurred some consumer sales. The question this year is whether recordable DVD drives and significantly cheaper notebooks can similarly perk up sales.
Preliminary numbers for October show that U.S. retail sales were worse than in the previous two months, said Steve Baker, analyst with NPD Techworld.
"I think sales on the desktop will be pretty weak," Baker said. "On the other hand, I think notebook sales will be very good, but they'll have a hard time beating last year. Last year had record notebook sales. Sales (in November and December) were about 40 percent above the comparable period in the prior year. Matching that number again will be difficult."
Promotional activity should increase when the holiday season gets into full swing after Thanksgiving.
"Promotions may also center on multimedia devices, like DVD burners," Duboise said. "Dell and Hewlett-Packard, for example, have (reduced) the cost to upgrade from a CD burner to a DVD burner." Those companies have dropped the price for such an upgrade on a desktop to about $200. Notebooks with built-incould also prove popular.
Several other promotions are likely to reappear as well after Thanksgiving. They include the processor-based rebate, which usually consists of a $100 mail-in rebate for customers buying a PC with either an Intel Pentium 4 or an Advanced Micro Devices Athlon XP. Retailers also often give consumers who buy a new PC a gift card worth $50 to $100 toward a future purchase. All of these promotions can be paired with manufacturer rebates, which usually range from $50 to $100 on a computer processing unit to as much as $250 on a CPU purchased with a monitor and a printer.
Savings and upgrades
Dell and Gateway are expected to keep the pressure on with a slew of their own rebates, instant savings and free component upgrades, like double memory or double hard-drive capacities.
Dell's flat-panel bundle offer includes its new Dimension 2350, which comes configured with a 1.8GHz Celeron processor from Intel, 128MB of RAM, a 30GB hard drive and a CD-ROM drive. With a 15-inch cathode-ray tube monitor, the machine starts at $569. Its new features include the addition of double data rate SDRAM and an Ethernet port.
Gateway's holiday deals include several inexpensive desktops. The company'sdesktop costs $399 after a $100 mail-in rebate. It comes with a 2GHz Intel Celeron chip, 128MB of RAM, a 40GB hard drive and a CD burner, but no monitor.
Some pre-Thanksgiving holiday retail promotions combine instant savings with mail-in rebates to lop off as much as $250 from the price of a new PC.
CompUSA is offering an Emachinesdesktop and a 17-inch CRT monitor, which normally sells for $929, for $699 after rebates. The $230 discount is a combination of a $60 instant discount and a $100 mail-in rebate from the store, as well as a $70 mail-in rebate from Emachines.
Best Buy offers an HP Compaq Presario 906US notebook for $899 after $250 in rebates. The machine, which normally sells for $1,149, is subject to a $50 instant-savings rebate and a $100 mail-in rebate from the store as well as a $100 mail-in rebate from HP. The laptop comes with an Athlon XP 1500+ processor, a 14-inch screen, 256MB of RAM and a 20GB hard drive.
Instant rebates and discounts are usually bankrolled by the retailer, though sometimes they're funded or partially funded by PC makers or others.
Circuit City is offering a Compaq Presario 6370US desktop for $1,249 after $250 in rebates from HP. The machine offers a Pentium 4 running at 2.53GHz, 512MB of RAM, a CD burner, a 120GB hard drive, a 17-inch CRT monitor and an HP DeskJet 3820 printer.
Most of these retail offers end Wednesday. But the retailers are expected to offer a fresh round of promotions starting Friday.